Richard Thaler on small cap stock investing

We are mainly invested in small caps.  This is not because we believe small companies to perform better than large corporations.  Rather, it is because we believe that active management has a better chance of success with small caps. 

This has to do with the simple rules of economics: There is less competition in the small caps segment.  Every asset manager around the world has an opinion on Apple or Google.  But if we take a closer look at a small, boring company that makes ball bearings in Iowa, there might be two analysts tracking the stock.  Hence, the market is much more likely to be mispricing this company.

~ Richard Thaler, "'Everyone thinks they are a particularly clever investor'," The Market, July 26, 2021